VAT Guide for Freelancers in Austria

Austria’s VAT policy is based on the "destination principle" of the European Union VAT system. This means that VAT is payable to the country's government where the product or services are consumed, regardless of where you're supplying them from. So, if you have clients in Austria, you have to comply with Austrian VAT rules. 

The standard VAT rate in Austria is 20%, with reduced rates of 13%, 10%, and 0% applying to a few products. This guide includes everything you, as a freelancer, need to know about VAT in Austria in a nutshell. Let's get started!

Who is Required to Register for VAT in Austria?

If you’re wondering whether you are eligible or required to register for VAT in Austria; we might have the answer you’re looking for:

  • If your annual revenue is less than €35,000, you are not liable to charge VAT for your services. 
  • If your previous year’s revenue is more than € 35,000, you are required to file and pay VAT and need to register for it.
  • This threshold is valid for the entire calendar year; that is, if your annual revenue exceeds €35,000 at the end of the year, you are liable to pay VAT on your fees received throughout the year.

VAT Exempted Goods and Services

According to the Austrian VAT law, the following are exempt from VAT:

  • Banking, financial, and insurance services
  • Health services
  • Shares and security transactions
  • Immovable property sales and leasing
  • Cultural services by non-profit organizations
  • Businesses or freelancers with annual revenue of less than € 35,000

 

Cross-Border Services as a Freelancer

  • In some instances, if you are providing your services to a customer having a business in another country (B2B), the customer’s office acts as a place of service, and there is a shift in the VAT liability from you to your customer.
  • If you are providing your services to a private customer (B2C), Austria is considered the place of service and you will be liable for VAT.

VAT for Expat Freelancers in Austria

There is no specific threshold for VAT registration for expats in Austria; instead, the country follows a reverse-charge mechanism to tax foreign individuals and companies. 

  • Under the reverse-charge mechanism, your customer is liable for the VAT due.
  • You are required to register for VAT only if you supply services that are not covered by the reverse charge. For example, in cases where you supply to private individuals.
  • If you supply services in Austria that are subject to a reverse charge and do not receive any service subject to a reverse charge, you are not required to register for VAT.

If you’re still confused, Xolo can help you register as a freelancer in Austria and handle all the necessary paperwork on your behalf. With Xolo Go, you can use a slice of our company as a legal framework to invoice your clients whether they're in Austria or beyond.

How to Register for VAT in Austria

If your annual sales turnover exceeds the VAT threshold limit, you must apply for a VAT identification number, either online or offline. Additionally, you are required to have an EU VAT Number if you plan on carrying out any form of intra-EU transaction. 

Online Registration:

  • You can register yourself by filling the U15 form at the Federal Ministry Republic of Austria Finance.
  • While the website offers both German and English translations, the U15 form is only provided in German.
  • Next, you are required to submit a few  other documents, including:
    • A copy of Articles of Association
    • A signature specimen 
    • A copy of an extract from your national trade register
    • If your services are registered somewhere else in the EU, the VAT Certificate
  • Finally, you will be assigned a VAT identification number.

You can also register using the Mini One-Stop Shop, an EU-wide tax system that allows you to consolidate all of your EU VAT in one single tax return. This is where the EU VAT number comes in. The scheme is optional but convenient and especially useful if you have customers in multiple countries within the EU, including Austria. MOSS allows you to avoid registering in each Member State of consumption. To learn more, click here.

Offline Registration:

To receive your VAT identification number offline, you are required to visit the Graz-Stadt tax office in person with the following completed forms:

  • A questionnaire (Verf 19)
  • A specimen signature document
  • A copy of your commercial register excerpt 

Your application has to have clear reasons and all the details related to the taxable transactions, your orders, and your customers and suppliers.

Alternatively, you can hire an accountant (or agency) to handle your VAT returns and dealings with the Austrian Tax Administration. Xolo provides services like Xolo Go and Xolo Leap, which help with precisely this and any other VAT concerns you may have.

What are the VAT Rates in Austria?

Now that you know how to register for VAT, you might be interested in understanding how much VAT you’re liable to pay! The Austrian tax administration levies four different VAT rates, and freelancers must charge the amount that applies to their products and services:

  • Standard VAT rate of 20% –  required to be paid on the goods and services provided.
  • Reduced VAT rate of 13% – applied on amusement parks and cultural events, accommodation in a hotel, domestic flights, firewood, wine production, certain agricultural supplies, and plants and flowers used for decoration.
  • Further Reduced VAT rate of 10% – applied on pharmaceutical products, books, periodicals and newspapers, water supplies, etc.
  • Zero-rated VAT – a 0% VAT is applicable on exports and intra-EU supplies of goods. Although there are no charges on zero-rated products, you should record sales of goods and services and create a report based on your returns.

Registering for VAT is only part of the process. In order to fully comply with VAT registration laws, you must also make sure to file VAT returns.

  • The  VAT amount you are required to pay is derived after subtracting the VAT that you charged your customers from the VAT you paid on the purchase of any materials required for your goods or services.
  • If the VAT you paid for your materials is more than what you charged your customers, the difference will serve as a VAT credit and be carried forward.
  • Similarly, if the VAT you charged is more than what was paid for your materials, the difference has to be paid to the government while filing VAT returns.
  • You are required to file your VAT returns electronically
  • If your previous year’s revenue is between € 35,000 and € 100,000, you can file Preliminary VAT returns and pay your VAT quarterly. You must ensure that the VAT is filed before the 15th of the second following month of the quarter. For example, your VAT for July has to be filed before 15th September.
  • If your previous year’s revenue exceeds € 100,000, you can file Preliminary VAT returns and pay your VAT monthly. You have to ensure that you file VAT before the 15th of the second following month from the concerned month.
  • And, if your previous year’s revenue is less than € 35,000, you don’t have to charge VAT for the supply of your goods or services.
  • If you file late VAT Returns, you will be levied a penalty of 10% interest on the unpaid VAT. Additionally, if you delay the VAT payment, a 2% interest will be charged.
  • Additionally, you are also required to file an annual VAT return by 30th April of the following year.

Does that sound excessive? At Xolo, we automatically generate, send, and store all your invoices digitally, so you won’t have to worry about missing due dates or misplacing documents.

How Xolo Can Help?

The tax registration process can be tricky at times, but we hope this guide has helped clear your doubts! If you’re still overwhelmed by the different schemes and numbers, and paperwork, Xolo offers a range of solutions that handle all the hassle while you focus on your core competencies. 

With Xolo Go, you can easily freelance and invoice your clients, even without a registered company or LLC. 

  • Signing up takes only 10 minutes, and once you do, taxation, corporate compliance, and all the tricky VAT calculations are all automatically taken care of in the background!
  • We charge a flat rate of 5% from every withdrawal to your personal bank account. No surprise fees, no contracts, and no BS.

  • Xolo Leap is the easiest and most effective way to create your own company through Estonian e-Residency! Reduce time spent on mundane business administration and focus on what you do best!
  • We offer different tiers of service depending on the solopreneur’s, or as we call them, Xolopreneur's, individual needs.
  • Once you get your business set up, you can run it from anywhere in the world! So whether you’re looking to gain access to the EU market or a digital nomad - this is the place for you! 

 

Simply put, we do the hefty work for you so that you can enjoy the freedom of freelancing. So connect with us immediately, and we’ll help you get your one-person business up and running in Austria in no time!